Kansas tax collections fall $23M short in October
Topeka ? Republican Gov. Sam Brownback’s fiscal policies were dealt an apparent blow Friday when the Kansas Department of Revenue reported state tax receipts came in $23 million short of projections in October and $46.5 million short for the first four months of the fiscal year.
Revenue Secretary Nick Jordan said the shortfall was due to higher-than-expected refunds paid out and lower-than-expected payments from people who had requested extensions on filing their 2013 taxes. Budget director Sean Sullivan called the shortfall “manageable,” saying it represents only 2.6 percent of the revenues the state expected to receive.
“A 2.6 percent revenue variance for the fiscal year 2015 budget is certainly manageable through good fiscal governance,” Sullivan said. “Moving forward, the Kansas economy shows signs of growth, and we will continue to protect core services and invest in education while finding efficiencies in state government without cutting services.”
The news came just four days before Election Day, with polls showing Brownback trailing Democratic challenger Paul Davis, who has made opposition to Brownback’s economic policies a central theme of his campaign.
In 2012, at Brownback’s urging, Kansas lawmakers enacted sweeping tax cuts that lowered individual income tax rates and eliminated state income taxes altogether on an estimated 191,000 businesses. Those include limited liability corporations and other types of entities in which the owners receive “pass-through” income from their business.
The following year, lawmakers passed additional tax cuts beyond the first wave, some of which are scheduled to be phased in over the next few years.
Brownback has referred to his tax policy as a “real live experiment” of the theory that cutting taxes will stimulate economic growth, saying the cuts would be like “a shot of adrenaline” in the heart of the Kansas economy.
But Davis has called the tax cuts reckless, and Friday’s report gave him another chance to argue that they will result in budget shortfalls that could force future cuts in state services.
“This is mounting evidence that the Brownback economic experiment just is not working and is not going to work,” Davis said Friday. “It’s further jeopardizing our state’s fiscal solvency, which is going to affect education and virtually every other critical state service that Kansans count on.”
So far, however, Davis has not openly called for repealing any of the tax cuts. He has said only that, if elected, he would call for freezing the tax code in place as of Jan. 1, delaying the effective date of future tax cuts scheduled to be phased in, to give his administration time to review the state’s entire revenue position.
Davis also has said future tax cuts should be delayed until base funding for public schools is brought back up to its pre-recession levels.
Asked how the state could afford to do that when revenues are already falling short of projections, Davis said the delay would be only a “first step.”
“We’ve clearly got a budget crisis on our hands,” he said. “There are going to be difficult decisions that have to be made in the future, but I think the first step is to freeze those tax rates where they’re going to be on Jan. 1, 2015.”